Final answer:
In The Binding of Isaac: Rebirth, 'Lump of Coal' is the item that causes tears to increase in damage and size the further they travel.
Step-by-step explanation:
In The Binding of Isaac: Rebirth, the item that capitalizes on the mechanic of tears gaining damage and increasing in size based on the distance they travel is A) Lump of Coal.
The tears will grow larger and deal more damage the farther they travel from Isaac. This is especially useful in larger rooms or when using items like Tiny Planet that increase the distance tears move before hitting their target. The damage increase mechanics of Lump of Coal make it a sought after item for players looking to maximize their damage output from a distance.